U.S. stocks were poised for a higher opening, however. Dow Jones futures rose 0.3 per cent to 13,470 and S&P 500 futures gained 0.4 per cent to 1,442.

In Asia, Japan’s Nikkei 225 index shed morning gains to close 0.1 per cent lower at 8,786.05. South Korea’s Kospi was nearly unchanged at 1,996.03.

Australia’s S&P/ASX 200 gained 1 per cent to 4,433. Stocks there were buoyed by the central bank’s decision to cut its benchmark interest rate by a quarter percentage point as a slowdown in China’s economy and persistent weakness in Europe adds to uncertainty about Australia’s economic outlook.

Benchmarks in Singapore, Taiwan and Malaysia also rose. Markets in Hong Kong, mainland China, and India were closed for public holidays.

Some investors were emboldened to weigh into stocks after the Institute for Supply Management said Monday its index of U.S. factory activity rose sharply to above 50, a reading that signals growth. The index had been below 50 from June through August.

The increase is a hopeful sign that the economy may be improving after a weak stretch. Economists welcomed the increase, though most still forecast slow economic growth below 2 per cent for the rest of this year.

The data “will boost hopes that some of the recent slowdown in economic growth was just a summer phenomenon,” Paul Dales of Capital Economics said in a research note.

That would hurt Spanish markets because many pension funds and banks would have to sell them from their portfolios and desist from buying them at auction. That, in turn, would force Spain to pay higher rates to borrow money, further hurting its government finances and possibly escalating Europe’s chronic debt crisis.

Benchmark oil for November delivery was up 35 cents to $92.83 per barrel in electronic trading on the New York Mercantile Exchange. The contract closed up 29 cents at $92.48 in New York on Monday.

In currencies, the euro rose to $1.2910 from $1.2886 in New York late Monday. The dollar rose to 78.09 yen from 78.02 yen.